Udit Misra writes: Merz wants Germans to work more. But he needs to incentivise them first

Germany is facing a strange reckoning. German Chancellor Friedrich Merz is asking Germans to work more if the country is to maintain its standards of living. The call for more work has been interpreted by many as Merz calling Germans lazy — a stark contrast from Germany’s image of efficiency and industriousness. In a recent speech, Merz laid out the factors holding back the German economy. He talked about reducing the bureaucracy, cutting down energy prices, and reducing the tax burden, among others. But what caught everyone’s attention was his call to reduce labour costs — by working more. He said: “Overall, the work performance of our economy is not high enough… With work-life balance and a four-day week, the prosperity of our country, which we have today, cannot be maintained in the future, and therefore we have to work more!” So, have Germans become lazy? In 2026, Germany is the world’s third-largest economy with an estimated annual GDP of $5.33 trillion. But its position is misleading, because it is way behind the leaders: The US has an annual GDP of almost $32 trillion and China almost $21 trillion. Even India (with a GDP of $4.5 trillion) is fast catching up, though it is much poorer in per capita terms (Chart 1). ## Why Germany lags behind There are many reasons why Germany has lagged far behind the US and was overtaken by China. One reason is its population, which has largely been stagnant over the past 25 years (Chart 2). And even this stagnant level of population is propped up by immigrants because left to itself, Germany has been experiencing a negative population growth — death rate being higher than birth rate (Chart 3). But more specifically, Merz’s contention — that Germans have been putting in fewer hours — is true. As Germany became more and more prosperous (rising GDP per capita), the annual working hours per worker have dropped quite sharply. Contrast this with what is happening in China (with its size of population), and one sees how China sped past Germany in overall size of economy (Chart 4). To be fair, if an average German earns far more in real wages (Chart 5) than workers in most other countries, it does not make sense to work more. But Germany also created laws that hold back workers from putting in more hours – or at least do not incentivise it. Merz aims to rectify the incentive structure. For instance, he mentioned lifting the “pre-employment ban”, which legally prohibited people from working longer in their companies beyond the standard working time limit. Udit Misra is Senior Associate Editor at The Indian Express. Misra has reported on the Indian economy and policy landscape for the past two decades. He holds a Master’s degree in Economics from the Delhi School of Economics and is a Chevening South Asia Journalism Fellow from the University of Westminster. Misra is known for explanatory journalism and is a trusted voice among readers not just for simplifying complex economic concepts but also making sense of economic news both in India and abroad. Professional Focus He writes three regular columns for the publication. ExplainSpeaking: A weekly explanatory column that answers the most important questions surrounding the economic and policy developments. GDP (Graphs, Data, Perspectives): Another weekly column that uses interesting charts and data to provide perspective on an issue dominating the news during the week. Book, Line & Thinker: A fortnightly column that for reviewing books, both new and old. Recent Notable Articles (Late 2025) His recent work focuses heavily on the weakening Indian Rupee, the global impact of U.S. economic policy under Donald Trump, and long-term domestic growth projections: Currency and Macroeconomics: "GDP: Anatomy of rupee weakness against the dollar" (Dec 19, 2025) — Investigating why the Rupee remains weak despite India's status as a fast-growing economy. "GDP: Amid the rupee's fall, how investors are shunning the Indian economy" (Dec 5, 2025). "Nobel Prize in Economic Sciences 2025: How the winners explained economic growth" (Oct 13, 2025). Global Geopolitics and Trade: "Has the US already lost to China? Trump's policies and the shifting global order" (Dec 8, 2025). "The Great Sanctions Hack: Why economic sanctions don't work the way we expect" (Nov 23, 2025) — Based on former RBI Governor Urjit Patel's new book. "ExplainSpeaking: How Trump's tariffs have run into an affordability crisis" (Nov 20, 2025). Domestic Policy and Data: "GDP: New labour codes and opportunity for India's weakest states" (Nov 28, 2025). "ExplainSpeaking | Piyush Goyal says India will be a $30 trillion economy in 25 years: Decoding the projections" (Oct 30, 2025) — A critical look at the feasibility of high-growth targets. "GDP: Examining latest GST collections, and where different states stand" (Nov 7, 2025). International Economic Comparisons: "GDP: What ails Germany, world's third-largest economy, and how it could grow" (Nov 14, 2025). "On the loss of Europe's competitive edge" (Oct 17, 2025). Signature Style Udit Misra is known his calm, data-driven, explanation-first economics journalism. He avoids ideological posturing, and writes with the aim of raising the standard of public discourse by providing readers with clarity and understanding of the ground realities. You can follow him on X (formerly Twitter) at @ieuditmisra ... Read More